611.5131/617

The Chargé in France (Whitehouse) to the Secretary of State

No. 7898

Sir: I have the honor to forward herewith a mimeographed copy and translation of the first French note dated September 15, 1927,76 and of the latest French note dated September 30th, concerning the [Page 682] situation raised by the new French tariff and the proposed negotiations for a commercial treaty.

In view of the Department’s telegraphic instruction No. 287 of September 22,77 directing this Embassy to forward by mail to all diplomatic missions in Europe copies of the first French note and of the Department’s reply,78 it is presumed that the Department desires these missions to be kept informed of further developments in this situation. Accordingly copies of the French text and a translation of the note of September 30th are today being sent forward, and the text and translation of any further notes that may be exchanged will likewise be transmitted.

I have [etc.]

Sheldon Whitehouse
[Enclosure—Translation79]

The French Ministry for Foreign Affairs to the American Embassy

The aide-mémoire which the Government of the United States delivered on September 20 to the French Government has been the object on the part of the latter of an especially exhaustive examination which gives rise to the following remarks:

1. The principle of the equality of commercial relations which the Government of the United States declares is the only sound basis of international relations and the only guarantee against a number of political or economic dangers which it recites in detail is far from having received the unanimous adhesion which the Government of the United States deems it to have obtained.

It is true that this doctrine was formulated in the United States during the latter part of the 19th century and “the equality of commercial conditions” completed, it is true, by “the abolition of economic barriers” was presented by them to the Allied and Associated Powers as one of the conditions for the reestablishment of peace.80 But the principle of equality of economic conditions even completed by the abolition of economic barriers was not held by the Peace Conference of 1919 to be a sufficient guarantee in itself to ensure fair and peaceful relations between nations and it is not the equality of commercial conditions but the more comprehensive formula of the equitable treatment of commerce which is contained in article 23 (e) of the Covenant of the League of Nations.81 There is no doubt either that the choice of this formula was dictated by reasons of necessary fair reciprocity and liberalism.

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When in 1922 the nations of Europe again met at Genoa82 it was not again the simple formula of equality of commercial conditions that they envisaged as the guarantee of economic restoration. In fact, article 9 of the Genoa proceedings states:83

“The Conference recalls the principle of the equitable treatment of commerce set out in article 23 of the Covenant of the League of Nations, and earnestly recommends that commercial relations should be resumed upon the basis of commercial treaties, on the one hand resting upon the system of reciprocity adapted to special circumstances, and on the other hand containing, so far as possible, the most-favored-nation clause.”

All later technical conferences, in the first rank of which should be placed the International Conference for the Simplification of Customs Formalities,84 admit that discrimination can be envisaged and content themselves with condemning unfair discrimination (article 2 of the convention).

Lastly, since the Government of the United States refers in its aide-mémoire to the conclusions of the recent International Conference at Geneva, it should be specified that the latter while proclaiming that “the mutual grant of unconditional most-favored-nation treatment as regards customs duties and conditions of trading is an essential condition of the free and healthy development of commerce between states,” admits immediately afterwards that it is for each country to decide “in what cases and to what extent this fundamental guarantee should be embodied in any particular treaty.”85

But what is most important to note is that the Economic Conference of Geneva, to which the American Government refers, did not only recommend the reciprocal granting in as large a measure as possible of the most-favored-nation treatment but placed in the foreground of its declarations the necessity of lowering excessive tariffs by common agreement. At the beginning of the chapter relating to commercial policy and commercial treaties it declares:86 “The main conclusion to be drawn from the work of the Conference in the field of commercial policy is that the time has come to put a stop to the growth of customs tariffs and to reverse the direction by an effort made along three lines, viz.: (1) individual action by states with regard to their own tariffs; (2) bilateral action through the conclusion of suitable commercial [Page 684] treaties; (3) collective action, by means of an inquiry, with a view to encouraging the expansion of international trade on an equitable basis by removing or lowering the barriers to international trade which are set up by excessive customs tariffs.”

Thus the Economic Conference at Geneva associates with the idea of equality of commercial conditions the reduction by autonomous or contractual means of the excessive tariffs at present in force and it is in full conformity with the doctrine of this Conference, warmly upheld by the French delegation, that the French Government has proposed to the Government of the United States a treaty based on both the application in as large measure as possible of the most-favored-nation clause and on the customs adjustments which might seem necessary in order to favor the commerce of the two countries.

France has on the other hand already applied the two inseparable aspects of the doctrine proclaimed by the Geneva Conference in a recent agreement with Germany. She is preparing other treaties on the same bases and she is able to note, in the course of the negotiations which she is pursuing, that most of the countries of Europe would consider not as progress but as a step backwards in commercial policy a partial application of the Geneva doctrine by virtue of which, whatever may be the commercial advantages exchanged, most-favored-nation treatment should be granted indifferently to all countries without taking into account the protectionism of some and the liberalism of others in such a manner that there would result a benefit for the former to the detriment of the latter and a miscarriage of justice as regards the contracting state itself.

2. This opinion is furthermore in accordance with the one which the United States endeavored to make prevail in the world when in 1778 in their treaty with France87 they introduced the conditional clause of most-favored-nation treatment and the obligation of a fair compensation for the advantages accorded by them to a third state and claimed by the contracting state.

The later declarations of President Monroe and President John Quincy Adams also proclaimed that the most-favored-nation clause could only be granted in exchange for special advantages. It would also be easy to invoke the jurisprudence of the Supreme Court of the United States, which decided, notably with regard to a treaty between the United States and Denmark,88 that the most-favored-nation clause obligated the two countries to avoid a hostile or discriminatory legislation but that its object was not to interfere with the commercial arrangements with other countries founded on the concession of reciprocal privileges.89

[Page 685]

Lastly, it was to respond to that constant underlying idea of equilibrium that the United States, during the 19th century, drew up a series of contractual systems the history of which was recently written by a former Chairman of the Tariff Commission,90 and all of which tended to establish a reciprocity in fact.

When the Government of the United States abandoned its efforts in this direction a few years ago91 one may wonder if the principal reason was not, in view of the rising level of its rates, that it preferred the liberty of autonomous tariff action to a policy of tariff contracts whose first result would have been, generally speaking, to impose sacrifices upon it.

It is true that the Government of the United States has thought that it could invoke not only international doctrine but French law itself. To bring out the essence of this law it relies upon the statements of Monsieur Meline and Monsieur Jean Morel. But the French Government cannot approve the presentation of French tariff law which the Government of the United States believed it its duty to make to it any more than it can its exposition of international law.

The tariff doctrine of France has been unvarying since 1892 but it does not correspond to the notion the American Government has of it.

Indeed, the law of 1892 stipulated in its first article that “the minimum tariff may be applied to goods of countries allowing French goods to benefit by correlative advantages and which will apply to them their lowest tariffs”.

This text expressly provides therefore that the absence of discrimination does not suffice to justify the granting of the minimum tariff but that in addition there must exist advantages correlative to those included in the French minimum tariff.

Since the law of 1892, commented upon by M. Meline, and since the report of M. Morel in 1906, the French Government has always subordinated the granting of the minimum tariff, that is to say the most-favored-nation clause, to the reciprocal granting of a regime favorable to its trade.

From 1892 to 1914 France concluded many treaties of commerce in which the concession of the French minimum tariff is limited to certain articles in view of the not very favorable regime which the contracting states granted in general to the French export trade; and it is on the basis of this French tariff law itself that the governments which from 1897 to 1910 negotiated with the United States in conformity with the doctrine which the Government of this country is invoking were not able to see their way clear, in view of the disparity [Page 686] of French and American tariffs and in view of the inequality of the advantages resulting from the general tariff established by the United States and the minimum tariff in force in France, to establish the relations of the two countries on the reciprocal granting of the most-favored-nation treatment.

The granting of the minimum tariff has never been considered by the French Government as the starting point of a negotiation but as the outcome of a compromise which has secured for French export trade the necessary safeguards.

It is in conformity with this spirit that the law of 1919 (which the Government of the United States did not mention) stipulated that in commercial conventions France could accord “reductions in the rates of the general tariff calculated in percentages on the difference existing between this general tariff and the minimum tariff”. The law of 1919 thus makes it clear that the granting of the minimum tariff does not indicate the minimum concession and the usual regime but the maximum concession and exceptional treatment which negotiators can, in exchange for correlative advantages, accord to foreign countries.

In the opinion of all the French Governments which have succeeded each other, the granting of the minimum tariff may be claimed as a matter of law but can only be obtained as a matter of fact by the states which assure to French products real possibilities of sale on their market.

It is in conformity with this same conception that the French Government in its explanatory statement of the draft tariff bill which it recently submitted to Parliament contemplated that in case the needs of the French export trade should be met by an equitable regime the most liberal application could be made of the law of 1919, namely, the general and unconditional granting of most-favored-nation treatment.

It is this treatment which the French Government has envisaged for the United States, if, however, the United States is disposed to assure to French commerce equitable conditions and possibilities of facilities to which, in order to respect the fundamental laws of the Republic, the Government must subordinate the favorable treatment which it offers to the United States.

The United States cannot be surprised that France should wish, in order to safeguard its exchanges and commercial balance, to obtain contractual guarantees. She must do so in the interest not only of her monetary and economic restoration but also of her international engagements. As the American experts were the first to say in the Dawes plan92 any country can only secure for itself possibilities of transfer by the sale of its goods.

3. The Government of the United States draws, moreover, from its trade with France and with foreign countries an ensemble of deductions [Page 687] tending to prove that France is not subjected to any discrimination; that this general regime which the United States accords it has not been unfavorable to its commerce and that in order to improve this commerce there is no need to provide any concession.

France is not complaining of being discriminated against by the United States; what she is complaining of is being subjected together with other states to a restrictive regime which, in view of the character of her production, is more prejudicial to her than to others and which although applicable to everybody has hit her commerce most particularly.

When the Government of the United States invokes in support of its argument the comparison of our exports of 1921 and 1926, specified in dollars, it is no doubt fair to object that the year 1921, when France still bruised by the German devastation was incapable of exporting, cannot serve as a term of comparison.

Even if the figures of 1921, that is, $141,885,000, are a trifle higher than those of 1913, which amounted to $136,877,990, in order to appreciate in an equitable manner the fate of French exports to America it is from these latter figures that calculations must be made taking into account moreover the world-wide increase of prices even when specified in dollars and France’s present power of exportation as compared with that of before the war.

If the regime which the United States imposed on French exportation had not been subjected since 1913 to regular restrictions both by the schedule of rates of the Fordney bill93 and by the manner in which they have been applied, the figure of $136,878,990 for 1913 should have amounted in 1926 to about $200,000,000 taking into account the increase which prices specified in dollars have undergone and the new possibilities of French exports.

It may therefore be rightly concluded that if the French exports of 1913 came to $136,877,990 and if the exports of 1926 are limited to $152,020,000, that signifies that French export trade to the United States has undergone a formidable restriction.

It is impossible not to recognize that this restriction is due to the excessive elevation of American tariffs affecting the principal French products as is shown by examples here given: fresh or dried or preserved mushrooms, 45 percent ad valorem; perfumery, cosmetics, etc., containing alcohol, 40 cents per litre plus 75 percent ad valorem; not containing alcohol, 75 percent ad valorem; porcelain, 55 to 70 percent ad valorem; cutlery, dutiable by the piece increased on an average by 45 percent; cotton plush, 50 percent ad valorem; upholstery fabrics, 45 percent ad valorem; yarns, weaves and fabrics of wool, dutiable by the pound increased by from 30 to 50 percent; twisted silk threads, [Page 688] 25 percent ad valorem; sewing threads and floss silk, 40 percent ad valorem; silks in piece and knitted fabrics, 55 percent ad valorem; velvet and silk plush, 60 percent ad valorem; tulle and silk lace, 90 percent ad valorem; clothes, articles of clothing of all sorts, 60 percent ad valorem; clothes containing lace or embroidery, 90 percent ad valorem; articles of jewelry or imitation jewelry, 80 percent ad valorem; men’s gloves, $5 per dozen pairs or 10 francs per pair.

Duties of this nature are in most cases higher than those of the French general tariff for the same articles and these duties are quadruple those of the minimum tariff.

It must be noted, moreover, that from 1913 to 1927 exports from the United States to France passed from 890,302,000 gold francs in 1913 to 1,512,968,000 gold francs from the period July 1, 1926 to June 30, 1927, although during that period the purchasing power of France was markedly diminished as a result of the monetary crisis and the increased production of France might have allowed her to dispense with such large imports.

It can, therefore, not be contended that the present regime to which imports from France into the United States are subject has not seriously prejudiced French exports and that the balance of benefits established by the simultaneous decrees of 1910 has not since that time been profoundly altered to our disadvantage.

Moreover, French exports encounter obstacles not only by virtue of restrictions resulting from the new American tariff but also by virtue of the methods of its application not only in America at the moment of customs clearance but also in France itself where, with a view to this clearance, the American customs administration asserts its right to resort to practices which the French law forbids to the French Government itself.94

In addition to the tariff and customs formalities there exists a series of regulations of a sanitary or phytopathological nature which are often completely fatal to agricultural exports from France.

To the argument of principle invoked by the American Government to establish that no concession can be made by America and that that country cannot contemplate any treaty of reciprocity, the French Government is obliged to reply that it does not believe that these concessions are impossible under the American law and that it had, moreover, never envisaged such a treaty of reciprocity as would be forbidden by that law.

The tariff act of the United States, notably section 315, gives the President the power after an investigation of the possible differences [Page 689] in costs of production between articles wholly or in part the growth or product of the United States and of like or similar articles wholly or in part the growth or product of competing foreign countries, to change the classification and to decrease the rates of duty in such measure as may be necessary to equalize the costs of production.

As regards the regulations concerning the application of tariffs and the regulations of a sanitary and phytopathological nature it likewise does not seem that alleviations cannot be found for the treatment which in many cases appears unjust to French exporters.

The French Government wishes to emphasize that it is not a question of engaging in tariff bargaining negotiations; it is only a question, in exchange for the particularly favorable regime of the French minimum tariff, of obtaining for certain articles of French exportation a less prohibitive tariff incidence than that to which they are subject at the present time by means of a rectification effected conformably to section 315 (a) of the compensatory duties which, upon erroneous data, the American Government has felt that it must establish, and of revising in such measure as may seem equitable the provisions of those regulations dealing with the application of tariffs or with the preservation of national hygiene which at the present moment result in an absolute prohibition in fact for certain French products.

Upon these tariff alleviations, which in all respects conform to the Constitution and laws of the United States, and upon these administrative investigations which are called for by considerations of simple equity, the French Government by virtue of the unchanging doctrine of France and of its laws must make dependent the grant to America of the most favorable regime which France grants to all other countries. These countries have in fact only themselves obtained this regime by giving France similar guarantees and it would constitute a failure to recognize their interests as well as those of French exportation to grant to American products, in spite of the restrictions to which at the present moment French products are subject, a treatment as favorable as that granted the products of other countries which, on the contrary, in order to obtain it have withdrawn the restrictions which they themselves oppose to French exportation.

4. The French Government, moreover, cannot fail to regret that the aide-mémoire saw fit to mention article 317 of the American tariff act whose application would be in conformity neither with the common desire for agreement on economic questions nor with the still too recent memory of the struggles which our two countries waged upon the ground of international justice.

The French Government must express its deep surprise to see that as a result of respecting the laws by which it is bound it [Page 690] finds itself threatened with reprisals whose injustice or excess becomes apparent as soon as one tries to evaluate the actual damage of which the United States alleged that it has to complain. The recent increases of duties only touch in fact 180,000,000 francs worth of American exports which from July 1, 1926, to June 30, 1927, reached 7,561,834,000 francs, that is to say, scarcely 2½ percent of American exportation. Furthermore, the French Government has been willing to propose a notable diminution of the duties to which since September 6 last this negligible proportion of American interests have been subject.

The American Government felt it could not agree to this proposition and replied to it by a note of principle to which the present note in the eyes of the French Government carries a decisive response.

The American Government will doubtless recognize, after having weighed the considerations above set forth, that on the ground of principles and of systems a compromise can doubtless not be found between the opposing points of view which the legislation of each of the two Governments obliges it to maintain.

On the ground of practical measures, however, the reciprocal good will of the two countries can easily show itself by provisional amelioration of the injury which each of them pleads. The French Government has already shown this good will in proposing to alleviate in a certain degree the tariffs recently raised to the detriment of a part, negligible, it is true, of American exportation. It is prepared to contemplate others which would not be of a nature to prejudice further negotiations for a long-term treaty or to render such a treaty futile, if the American Government will not refuse, as it has hitherto, to examine within the limits of its own legislation the just claims of the French exporters.

If this proof of common conciliation should result within a short time in a provisional arrangement, the French Government does not doubt that negotiations immediately to be undertaken may lead to a durable treaty doing justice to the interests of both countries.

  1. See telegram No. 352, Sept 5, 4 p.m., from the Chargé in France, p. 673.
  2. Not printed.
  3. See telegram No. 282, Sept. 19, to the Chargé in France, supra.
  4. File translation revised.
  5. See Foreign Relations, 1918, supp. 1, vol. i, p. 15, paragraph numbered III.
  6. Malloy, Treaties, 1910–1923, vol. iii, pp. 3336, 3344.
  7. April 10 to May 19, 1922. The United States was not officially represented; see Foreign Relations, 1922, vol. i, pp. 384 ff.
  8. Great Britain, Cmd. 1667 (1922), Papers Relating to International Economic Conference, Genoa, April–May, 1922, p. 72.
  9. The United States was not represented, except by an observer, and was not a signatory of the convention, signed Nov. 3, 1923; League of Nations Treaty Series, vol. xxx, p. 371.
  10. League of Nations, Report and Proceedings of the World Economic Conference, vol. i (C.356.M.129.II–C.E.I.46) (Geneva, 1927), p. 43.
  11. League of Nations, Report and Proceedings of the World Economic Conference, vol. i, p. 39.
  12. Miller, Treaties, vol. 2, p. 3.
  13. Convention of Apr. 26, 1826; Miller, Treaties, vol. 3, p. 239.
  14. Bartram v. Robertson, 122 U. S. 116.
  15. Presumably Frank W. Taussig, Chairman of the United States Tariff Commission, 1917–1919; author of Free Trade, the Tariff and Reciprocity (1919).
  16. The Tariff Act of 1909 (36 Stat. 11) repealed existing provisions of law providing for reciprocity arrangements.
  17. See Foreign Relations, 1923, vol. ii, pp. 46 ff.
  18. i. e., the Tariff Act of 1922.
  19. Presumably the reference is to the activities of the American Tariff Commission and of representatives of the Treasury Department in accordance with the mandatory provisions of the Tariff Act of 1922, sec. 510 (42 Stat. 968). See also Foreign Relations, 1925, vol. i, pp. 211 ff., “Unsuccessful Efforts To Have American Customs Attaches Accorded Diplomatic Status.”